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Agency problems and goal conflicts

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Author Info
Robert A. Eisenbeis

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Abstract

Agency theory is used to evaluate how the European Union (EU) may deal with the resolution of goal and agency conflicts in dealing with failing financial institutions. Experience in the United States suggests that the financial and regulatory structure being put in place, which relies upon country-sponsored deposit insurance funds and home country responsibility for supervision and lender-of-last-resort functions, is not likely to be robust to the failure of a large EU institution that threatens the solvency of the deposit insurance fund or that poses systemic risk. The author concludes that the EU needs a centralized and common approach to dealing with troubled institutions.

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Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2004-24.

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Date of creation: 2004
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Handle: RePEc:fip:fedawp:2004-24

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. The Economic and Financial Committee., 2001. "Report on Financial Crisis Management," European Economy - Economic Papers 156, Commission of the EC, Directorate-General for Economic and Financial Affairs (DG ECFIN).
  2. Dirk Schoenmaker & Sander Oosterloo, 2005. "Financial Supervision in an Integrating Europe: Measuring Cross-Border Externalities," International Finance, Blackwell Publishing, vol. 8(1), pages 1-27, 07. [Downloadable!] (restricted)
    Other versions:
  3. Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August. [Downloadable!] (restricted)
  4. Kroszner, Randall S & Stratmann, Thomas, 1998. "Interest-Group Competition and the Organization of Congress: Theory and Evidence from Financial Services' Political Action Committees," American Economic Review, American Economic Association, vol. 88(5), pages 1163-87, December. [Downloadable!] (restricted)
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  5. Edward J. Kane, 1987. "Who Should Learn What From the Failure and Delayed Bailout of the ODGF?," NBER Working Papers 2260, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Thomas E. Pulkkinen & Eric S. Rosengren, 1993. "Lessons from the Rhode Island banking crisis," New England Economic Review, Federal Reserve Bank of Boston, issue May, pages 3-12.
  7. Robert R. Bliss, 2003. "Bankruptcy law and large complex financial organizations: a primer," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 48-58. [Downloadable!]
  8. Armen Hovakimian & Edward J. Kane & Luc Laeven, 2002. "How Country and Safety-Net Characteristics Affect Bank Risk-Shifting," NBER Working Papers 9322, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Robert A. Eisenbeis & Larry D. Wall, 2002. "Reforming deposit insurance and FDICIA," Economic Review, Federal Reserve Bank of Atlanta, issue Q1, pages 1-16. [Downloadable!]
  10. J.G. Rotte & M.P.H. de Vor, 2001. "Report on Financial Management," Research Series Supervision (discontinued) 36, Netherlands Central Bank, Directorate Supervision. [Downloadable!]
  11. Kane, Edward J, 1977. "Good Intentions and Unintended Evil: The Case against Selective Credit Allocation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 55-69, February. [Downloadable!] (restricted)
  12. Edward J. Kane, 1988. "Changing incentives facing financial-services regulators," Proceedings, Federal Reserve Bank of Cleveland, pages 265-279.
  13. Edward J. Kane, 1987. "Who should learn what from the failure and delayed bailout of the ODGF?," Proceedings, Federal Reserve Bank of Chicago, pages 306-326.
  14. Prati, A. & Schinasi, G.J., 1999. "Financial Stability in European Economic and Monetary Union," Princeton Studies in International Economics 86, International Economics Section, Departement of Economics Princeton University,.
  15. Kane, Edward J., 2003. "What kind of multinational deposit-insurance arrangements might best enhance world welfare?," Pacific-Basin Finance Journal, Elsevier, vol. 11(4), pages 413-428, September. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Holopainen, Helena, 2007. "Integration of financial supervision," Research Discussion Papers 12/2007, Bank of Finland. [Downloadable!]
  2. Santiago Carbo-Valverde & Edward J. Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," NBER Working Papers 13782, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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